Grubhub Targeted by Class Action Lawsuit Over Adding Restaurants to Its App Without Permission

The common business practice by delivery apps can create problems for restaurants and confusion for customers.

Online food ordering platforms like Grubhub, Doordash, and Postmates have become integral to many customers’ and restauranteurs’ quarantine survival strategies. But prior to dining rooms across the country shutting down, delivery apps and business owners weren’t always seeing eye to eye, a sentiment that, despite a global pandemic upending the restaurant industry, is still lingering. On Monday, Gibbs Law Group filed a class-action lawsuit accusing GrubHub of adding over 150,000 restaurants to its platform without their permission.

The suit was filed on behalf of two plaintiffs: Antonia’s Restaurant in Hillsborough, NC and The Farmer’s Wife in Sebastopol, CA, both of which had their restaurants unwittingly added to the platform and, according to Eater, remain there despite requests to be removed, a condition Grubhub has previously said it would comply with. The lawsuit is seeking a cessation of such practices by Grubhub, as well as damages to be paid out to affected restaurants.

NYC Grubhub Food Delivery Man, Plaid Mask, Camouflage Hat Reads Phone as Rides Down Lexington Avenue
Christine McCann/Getty Images

The problem of unsolicited delivery app orders is so widespread that, in California, a new law called the Fair Food Delivery Act will make the practice of adding restaurants to a platform without their express permission illegal staring next year. This new lawsuit also sheds light on a growing list of complaints restaurant owners have with third-party delivery platforms’ practices, which have also included setting up their own websites for restaurants and creating intermediary phone numbers which are then subject to fees charged to the restaurant.

Restaurant owners have good reason to be dubious of the presumed publicity and increased business that might come with being automatically listed on a delivery app. One reason is a lack of control over the customer service experience, which was cited in a 2015 suit In-N-Out filed against Doordash, claiming that the burger chain would be seen as liable for wrong orders or poorly executed delivery, despite not agreeing to or wanting to offer delivery service. As the new GrubHub lawsuit states outright, “Consumers understandably blame the restaurants, who they think have partnered with Grubhub to provide them with accurate, reliable, and timely service. The end result for restaurants is significant damage to their hard-earned reputations, loss of control over their customers’ dining experiences, loss of control over their online presence, and reduced consumer demand for their services.”

The lawsuit points out that while adding more restaurants to a platform like Grubhub is good for the app, it requires workarounds like asking drivers to both place and pay for orders (unlike those that are sent directly from the app to a partner restaurant and then simply picked up and delivered by the driver). According to allegations in the the lawsuit, drivers in these cases are told to act as though they’re the customer and are encouraged to downplay their Grubhub affiliation. This not only increases the amount of potential human error in the order, but also removes things like tips for the actual restaurant workers from the equation. Meanwhile, the consumer isn’t made aware that their order is being handled any differently behind the scenes.

Another factor is misinformation, from outdated menu offerings and prices to, in the case of San Francisco’s Michelin-starred Kin Khao, misidentifying the restaurant entirely and delivering food from a completely different kitchen. The apps, including Grubhub, have maintained that the exposure a restaurant receives on their platform is ultimately a worthwhile investment. However, some restaurants may not see that as a benefit and may simply not want any more business than they can already handle.

The lawsuit also claims that utilizing these practices is, in part, what led to a financial turnaround for Grubhub which recently found a buyer at a valuation of $7.3 billion.

And even when restaurants do enter into a partnership with apps willingly (or begrudgingly), they’re signing up to give away a significant cut of the profits. As Eater points out, during the pandemic, some restauranteurs have taken to posting photos of their earnings from delivery app orders as a way of showing their customers the real cost of utilizing a third-party for delivery.

To combat that last point, some cities have instituted delivery fee caps throughout the ongoing pandemic, and others are considering similar measures.

While the lawsuit against GrubHub is pending, until delivery platforms can figure out how to work with partner and non-partner restaurants more symbiotically, it’s as good a time as any to reconsider deleting those apps altogether.

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